Why The Shale Oil "Miracle" Is Becoming A "Debacle"

Tyler Durden's picture

Authored by Chris Martenson via PeakProsperity.com,

Energy is everything. 

This is an amazingly important concept. Yet it's almost universally overlooked.

Sometimes it’s hard to appreciate the magical role energy plays in our daily lives because most of what we experience is a derivative of it. The connection is hidden from direct view.  Because of this, most people utterly fail to detect or appreciate the priceless and irreplaceable role of high net-energy fuel sources (such as oil and gas) to our modern lifestyle.

With high net-energy, society enjoys increasing complexity and technological advances. It's what enables us to pursue massive goals like desalinating billions of gallons of seawater, or going to Mars.  But without high net-energy fuel sources, our capabilities quickly regress to those of decades -- or even centuries -- past.

Which is why understanding where we truly are in the 'net-energy story' is so incredibly important. Is the US on the cusp of being "energy independent" from here on out? Is the "shale miracle" ushering in a glorious new 'boom' era that will vault America to unprecedented prosperity?

No. The central point of this report is that the US is deluding itself when it comes to energy abundance (generally) and oil (specifically).

Yet that's not what we hear from the cheerleaders in the industry or in our media. From them, we hear a silver-tongued narrative of coming riches -- a narrative that contains some truth, some myth, and a lot of fantasy. 

It’s those last two parts -- the myths and fantasies -- that are going to seriously hurt many investors, as well cause a lot of extremely poor policy and investment decisions. 

The bottom line is this: The US shale industry resembles a fraudulent Ponzi scheme much more so than it does any kind of "miracle".

How do I know that?  Because, collectively, US shale companies have lost cash in every year of their existence.  The burned through cash when oil was $100 -- and again when it was $90, $80, $70, $60, $50, $40, and $30 a barrel.  They burned through cash in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016.

You don’t have to be a finance guru to appreciate or understand that any industry that persistently burns through cash is a bad deal.  Especially one whose prime product – shale wells – principally deplete (-85%) in roughly three years.  If you’ve been in business for 9 years drilling wells that mostly run out in 3 years, and you haven’t managed to produce positive cash flow at any point along the way, then it's time to admit that your business model simply doesn’t work.

As even The Economist magazine recently noted:

The [US shale] industry has also lifted productivity. Drilling is faster, more selective and more accurate, and leakage rates are lower. Wells are being designed to penetrate multiple layers of oil that are stacked on top of each other.

 

But the fact that the industry makes huge accounting losses has not changed. It has burned up cash whether the oil price was at $100, as in 2014, or at about $50, as it was during the past three months.

 

The biggest 60 firms in aggregate have used up $9bn per quarter on average for the past five years.

 

As a result the industry has barely improved its finances despite raising $70bn of equity since 2014. Much of the new money got swallowed up by losses, so total debt remains high, at just over $200bn.

(Source)

Let’s run that math. Five years is 20 quarters. That times $9 billion/quarter is $180 billion dollars in cumulative operating losses. This begins to give us a sense of the magnitude of losses investors will face when the music finally stops.

Or we could note the $200 billion of total debt outstanding for the industry.  Hmmmm…with WTIC oil at $47/barrel, a typical wellhead price (that the operators actually receive being less than WTIC, always) might be closer to $40.  $200 billion divided by $40 means that 5 billion barrels of future wellhead production is required just to pay back the debt! 

If the industry decided to use the next 5 billion barrels coming out of the ground to debt reduction (it never would decide this, but bear with me for the sake of this intellectual exercise), we'd also need to include the time value of money (and actual production rates over time) and observe that the debt carries an interest rate of 5% to 8% (depending on the company). Taking that into consideration, then the next 6 billion barrels would be required to satisfy the debt, plus interest payments! 

Oh, right. And then there's the issue of repaying the $70 billion of equity raised since 2014. With some sort of return, if possible, of course.

I hope you see the same staggering disconnect in these numbers I do. Which is why, without have to go too far out on a limb, I’ll state that massive losses are coming to the (bag)holders of all this debt and equity.

So why care? Because you need to understand these details in order to position yourself properly for the future. The implications are enormous.

The Danger Behind Myths and Fantasies

Once you become aware of the magical thinking involved, you then have a chance of knowing why the future is going to be very difficult for the shale industry, its investors, and then the nation(s) depending on its oil production.

Hey, sometimes myths and fantasies are harmless to hold. Like dreaming that someday you’ll be a major rock star.

But some can be incredibly damaging because they lead to poor life choices and decision-making. Like emptying your bank account to bet on the Powerball lottery, where your chances of winning are 292,201,338 to one. Or committing your nation to a ground war in Asia thinking you can "win". 

The promise of US shale oil is a very dangerous siren song. It was so carefully marketed to gullible investors that even Obama’s speechwriter and fact checkers got swept along.  This is from Obama’s State of the Union speech from 2014:

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy.  The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.

(Source)

What does “energy independence” mean?  It turns out, this crowd-pleasing phrase is a fantasy that lacks any useful grounding in reality.  What  those who claim "energy independence" are doing are lumping all forms and sources of energy into a single bucket, and then asking if the size of that bucket matches our current demand.

This is an inappropriate and dangerously misguided way to look at things is because the various types and sources of energy are not interchangeable.  They don't function the same way. They generally can't be substituted for each other. And they don't cost the same.

For example, your automobile might run on gasoline which costs $2.50 a gallon.  Suppose instead you could buy coal cheaper than gasoline on a BTU basis; is that any help to you as an auto driver?  Would you suddenly put crushed coal into your gas tank instead of gasoline? No, of course not.

What if you had a micro hydro plant operating in your backyard and could extract a more Kilowatt hours of electricity from it each week than you needed. Would that make you “energy independent?”

Not if you drive a car that requires gasoline. Or cook on a gas-powered stove. Or heat your house with an oil-burning furnace.

The same is true for the US (or any country). A country is not "energy independent" unless it can meet all of its national energy demands with enough BTUs in each of the needed fuel types. Just looking at oil alone, the US still imports millions of barrels per day -- even with the "shale miracle". I'll get into this more deeply in just a moment.

But first, back to the myth of "energy independence". The EIA itself has been a major proponent of this useless data glob as seen in their most recent 2017 Annual Energy Outlook:

(Source)

So, when the US lumps all of its various sources of energy into one spot – including hydropower, wind, solar, coal, oil and natural gas – nothing useful emerges from that method.  We cannot know from it if we will have too much or too little of any one type of energy, or how much we’d be under or over budget in selling the surplus of one and buying to cover the deficit of another.

The delusion has only gotten worse under Trump. The useless and misleading clumping of energy into a single bucket has morphed into an even larger error; one shared by many otherwise intelligent "experts". 

See if you can spot the error (I bolded it so you shouldn’t have too much trouble):

Trump Hails 'Energy Revolution' as Exports Surge

June 27, 2017

 

WASHINGTON (AP) — President Donald Trump on Tuesday hailed an energy revolution marked by surging U.S. exports of oil and natural gas.

 

Trump cited a series of steps the administration has taken to boost energy production and remove government regulations that he argues prevent the United States from achieving "energy dominance" in the global market.

 

"Together, we are going to start a new energy revolution — one that celebrates American production on American soil," Trump said in a statement, adding that the U.S. is on the brink of becoming a net exporter of oil, gas and other energy resources.

(Source)

It is a massive error to state that the US “is on the brink of becoming a net exporter of oil.” While I can see how that conclusion follows logically from all the disinformation provided about “energy independence” and the hype spouted by Wall Street and the shale companies -- it’s totally false.

The US is NOT on the brink of becoming a net oil exporter. And it almost certainly never will be. 

Here’s the data: 

(Source)

The above chart tells us that, to become a net exporter, the US would have to both hold demand steady (i.e. not increase consumption at all) while also boosting production by nearly 5 million barrels a day (mbd).  That is, the entire current output of the shale “revolution” would have to be replicated, because current total shale oil output in the US is around 5 mbd

But it would actually be harder than that. As already mentioned, shale wells have ferocious decline rates; so an additional 5 million barrels per day would require adding to new production aggressively each year to offset this ongoing extreme loss of production. 

Well, before another shale 'miracle' comes roaring out of the gate we’d need two things: enough new places to drill and more massive injections of capital.  Both are suspect at this point.

One analyst doing a superior job looking at the details is Rune Livkern of Fractional Flow, who made this excellent chart estimating that in the Bakken play, one of the best-performing  shale basin darlings of the entire “revolution,” the cumulative negative cash flow between 2009 and 2016 (a full 7 years of history) totaled some -$32 billion in losses:

(Source)

Now why do shale oil operators keep burn cash in every time period?  Especially given the hype that they're constantly becoming better and more efficient at drilling.  Better productivity should mean better profitability, especially when you have the big operators like Pioneer Natural Resources (PXD) constantly saying things like this (from their last investors conference call):

"Our break-even oil price is $20 a barrel," Frank Hopkins, Pioneer’s senior vice-president, told an industry conference in London this week. "Even in a $40 world, in a $50 world, we are making good returns.

(Source – Bloomberg)

A company breaking even at $20 should be rolling in cash with oil at $45.  But they aren’t.

Here’s the cash flow chart from PXD. 

(Source)

Ouch.  What explains the huge gap between the company’s own statements and its actual performance?  How can the entire industry be doing so poorly?

This mystery is solved by some basic research showing that as the price of oil moves up or down, so too do the breakeven prices:

Dr. Anas Alhaji, an economist and oil industry consultant based in Texas, along with Al Rajhi Capital, compiled the breakeven points for the largest shale producers between 2014 and the start of 2017. When placed alongside a graph of the spot price of WTI oil from the end of three quarters prior, it appears the breakeven points for shale are actually a function of the past price of oil itself.

 

This indicates that because shale costs are not fixed or even stable, the industry will likely struggle to achieve consistent profit unless the labor market and vendor markets are transformed.

 

Essentially, shale should struggle to achieve sustained profitability, no matter the price of oil.

(Source)

Here’s the chart produced by that study. It’s plain ugly for shale investors, for a couple of reasons:

(Source)

First, the blue line is the weighted average breakeven cost to produce oil from shale wells.  Second the orange line is the WTI price of oil -- it's usually below the blue line. 

Keep in mind: the WTI price is always higher than the price the operators actually receive at the well head for their produced oil because of shipping and other costs.

So mystery solved. Costs higher than revenues = Losses.

This chart says “These companies do not make money doing what they do.”  The companies' own financial filings say the same thing.  There’s no real mystery here.  These companies are losing money and they have been for years.

So, when will this really start to matter? And how will it likely play out?

What can investors do to position themselves to hedge against or profit from the inevitable losses that will be realized in this industry? Given the size and the importance of this sector and its product (oil), the repercussions will be felt far beyond the share companies themselves, up to and including sovereign assets.

In Part 2: The Coming Shale Debacle we detail out our projections and strategy for investors to consider in their portfolio positioning. The investment world rarely provides opportunities with as predictable a result as the correction coming to the shale industry.

Click here to read the report (free executive summary, enrollment required for full access)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
So Close's picture

Who fucking cares.. you guys...  Even if all companies in the field go bankrupt (They won't) someone is gonna pick up the pieces cheap and carry on.  Only the debt gets destroyed.  I swear... zerohedge had leaned a bit toward shale-snuff porn.

shovelhead's picture

Lol.

Picking up a negative for cheap ain't really much of a deal.

So Close's picture

"IF" it is a negative based on current debt levels (and there is plenty of reason to think it is not) once the debt burden is relieved (via BK) it is a whole different animal.  It amazes me that folks do not get this.

The Cooler King's picture

If the SHALE OIL drillers would just pump a little of their 'profits' into drilling for BITCOINS, then, I guess...

 

Their problems would be solved!

 

WHAT.COULD.POSSIBLY.GO.WRONG?

 

FFS ~ They could then PUMP all those 'PROFITS' into FRACKING the Yellowstone CALDERA (as NASA might suggest), and prevent an EXTINCTION LEVEL EVENT, all the while making MOSLEY independently wealthy &/or give him a chance to, at least, put a bean bag to sit on in the living room of the house that was 'emptied' because he sold all his silver when the 'Crash JPM' idea failed.

philipat's picture

Now, the folks on Wall Street may be a lot of things but stupid isn't one of them. So why do they keep financing these money-losing Companies when they can see there is no way to profitability? Put that together with the Government statements on the industry and self-sufficiency (OK, Government may be a lot of things and stupid probably IS one of them) but I am forced to wonder what gives here? Is there something nefarious going on involving Government (Or the ESF) as part of a strategy to conrinue to place pressure on Russia by virtue of unrealistically low energy prices?

Of course, if this is the case, it isn't working, as with so many of these genius Washingtom plans because it is just forcing Russia and China into an ever-closer alliance and accelerating the demise of the Petrodollar, which is about the only thing left for the US.

DWD-MOVIE's picture

I’m making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do… http://disq.us/url?url=http%3A%2F%2Fwww.jobproplan.com%3A68UoF1LgzM-Yo3S...

shovelhead's picture

Ok now borrow to produce and what do you get?

I get it. The mythical buyer has endless deep pockets to spend on a hole with declining output.

How silly of me not to notice.

OpenThePodBayDoorHAL's picture

The author says "energy is everything". Close but no cigar: money is everything.

So this can continue because we live in an era of free money. So long as there is unlimited free money being created we can have as many "money-losing" shale enterprises as we want. They're "losing" something that is free so who cares? 

A tree needs air to grow. Air is available in unlimited quantities and is free. Therefore the tree will keep growing.

Some shale companies will have debt holders that get impatient. Then that debt can be acquired by another company with access to more free money. It's turtles all the way down to sub-$20 oil.

BTW, from here we'll get lower rates and more QE.

You're welcome.

Blue Steel 309's picture

Oil=physical energy. So you tell me if shale production is in "trouble", or if the USD is in trouble.

Toxicosis's picture

So if you possibly run low or totally out of a specific food or resource, and you throw lets say a quadrillion dollars at it, does it magically just appear because you have deep pockets?  Could you explain that to me?

And lets say we have an extinct animal species that bit the dust oh 500 years ago or so and we have a fuck ton of money.  Will it bring the species back.  I mean that would be wonderful, if only it was true.

So no money has never been really anything, other than a CLAIM on resources in one way shape or form.  So sorry no cigar!

Sparkey's picture

I think Money could properly be defined as "Consumption Deffered" a concept which retains it's value as long as there is something to be consumed, money, existing as it does only as an idea in human minds, has no intrinsic value beyond what it can be traded for, Money isn't magic although it is often presented as such.

Winston Churchill's picture

Good luck defying the laws of physics by printing and throwing money at them.

Its literally what we have been doing for quite a while.it works until it doesn't.

Negative interest rates are really a function of low eroei.

ie civilisation cannibalizing itself because the net energy equation is not enough to maintain our "civilization".

You haven't seen anything yet on negative interest,its barely even started.

 

 

Sparkey's picture

Thank you Winston, There is a lot of things I don't understand, and I think there are a lot of things no one really understands, for instance, no one can really predict the unexpected, or unwanted, consequences of their actions, things happen, one thing which seems to happen is that it requires exponentially more energy (Money) to maintain the status quo, perhaps because the system requires the natural world to produce ever more Money as a consequence of the passage of time, a finite World expected to make available ever larger quantities of Money yet the production of that money requires the destruction of the very World that produces the money, perhaps I am sufferig from a lapse of logic here? anyone care to comment?

Mr 9x19's picture

oil is over, done, it is thing of the past.

 

you chosen to go shale, you  fucked up.  be responsible.

Agstacker's picture

Yet you type that on a plastic keyboard made from...oil.

 

Ignorance is bliss.

Serfs Up's picture

""IF" it is a negative based on current debt levels (and there is plenty of reason to think it is not) once the debt burden is relieved (via BK) it is a whole different animal. "

Looks like you couldn't properly read the chart that shows that the oil extracton costs were always higher than the price of oil at all times.

Do you find it difficult not being able to proerply interpret data, or does it not really hinder your world views and opinion spouting habits much?

 


johnnycanuck's picture

So the 'head to shovel' treatment is paying some dividends :)

Joking aside, I'm impressed you do have some expertise.

Ignorance is bliss's picture

Nope. No oil no hedgemoney. The U.S. Consumes way more oil per capita then any other nation on the planet. Outside of the Middle East and some African nations, oil is depleting everywhere. Example: Mexico has about 10 years of measures reserves. This is a real issue that will impact how we interact with the world for generations. Everything we do, eat, work, play etc..is based on energy...especially petroleum.

Government needs you to pay taxes's picture

Money is just paper.  And if you want to label organizations that will NEVER make money, let's add Tesla and .gov to the conversation.  Shale oil CAN make $.  It's just the sandniggers want to skull-fuck the world with their monopoly pricing and are SCARED AS SHIT about shale oil breaking their grip.  If there was EVER a good industry for the US to run consistently in the red, it is shale oil.  We need incremental NRG independence.

Offthebeach's picture

Maybe,  maybe not.  If you import oil, produce aircraft, food, weapons, porn and it is exported, is that oil consumption debted to the world consumer?  It should be.

 

phaedrus1952's picture

So Close

 

Zerohedge has only posted one article, of which I'm aware, that was remotely accurate concerning this so called Shale Revolution.

You know, I know, that most of the data contained in the above article is skewed to the extent of being grossly misleading.

Unconventional production in the US this past decade has rocked the global hydrocarbon industry and the follow on political, social and economic consequences continue to reverberate.

The unfathomable amount of shale gas - in methane and liquid components - will fuel, heat, power and provide feedstock for the lowest cost manufacturing in the world.

This is why Asian, European, Latin American companies are migrating to the US to build new plants.

fx's picture

The consumers of the cheap and abundant nat gas (and oil) did and will make a killing, no doubt. But thast doesn't change the fact that the frackers haven't made money yet, collectively- Actually quite the opposite, they burnt a ton of money . Maybe that will change for the better going forward (with all the hype around the Permian), maybe it will not. We will have to see. I am certainly not holding my breath for the shale miracle to play out favorably for investors.

Toxicosis's picture

So how is the above article skewed?

How is the above article misleading?

Do you mean that the math is wrong?  Do you mean that decline rates for these fields don't really happen?  It must all be a figment of the frackers and their backers imagination. 

Please provide some basis for your statements.  In fact please provide some evidence for your statement.

phaedrus1952's picture

Sure.

 

Take the graphic from Rune Likvern up above denoting the cash flow versus debt from the big Bakken operators.

Starting at the extreme left, the operators converted an area twice the size of New Jersey that was almost entirely empty rangeland/farmland and made it into one of the world's only 1 million barrel per day producing regions ... and accomplished this in a few years' time in frequently harsh weather conditions.

Just as the cash flow was turning positive, OPEC opened the floodgates driving down prices, hurting all producers globally.

The worst of the financial squeeze is behind most of these operators, although consolidation will continue.

They all need 60 buck WTI to stabilize finances.

Regarding decline, the site shaleprofiledotcom has detailed graphics displaying production profiles.

The decline is not nearly as severe as commonly reported, and recent very high initial production is enabling returns much more quickly than years ago.

The natgas situation should need little explanation to observers these past few years.

The output from the Appalachian Basin (Marcellus/Utica/Upper Devonian) is stunningly high, productive, and poised to skyrocket further the next several months as new pipelines come onstream.

 

Do not misinterpret when I say the pessimism regarding shale is completely misplaced.

These smaller companies have revolutionized hydrocarbon production in a brief period of time and many have paid the price.

Going forward, there is now recognized (to the knowledgeable observer) vast amounts of oil and especially gas that will play a major role in world affairs for decades to come.

 

I wish sometimes that ZH would post a more informative article on this topic.

francis scott falseflag's picture

AVAST PHAEDRUS1952

there is now recognized (to the knowledgeable observer) vast amounts of oil and especially gas

that will play a major role in world affairs for decades to come.

If you don't say so yourself.  You must be one of those self-proclaimed 'knowledgeable observers'

upon whose visions you have built your dainty house of cards.


Can you reveal something to us about these VAST AMOUNTS OF OIL (we all knew about "especially gas")?

Or is it a secret amongst the Friends of GS?

 

For your information, my knowledgeable observer friend, the planet is running out of oil and Ghawar

has peaked.  Which explains all the funny business that KSA has been amusing us with these last few

years.  Selling off Aramco, borrowing money, doing to Qatar what Saddam tried to do to Kuwait.

 

Everything is a pathetic joke to prevent the world - especially the American Elites - from 

knowing that the planet is low on crude oil.  Ergo, new growth in the global GDP is unlikely.

 

Et cetera, et cetera, et cetera.

  

I look forward to your stouthearted reply.


Rufus Temblor's picture

And when all that "unfathomable amount of shale gas" supply is added to the market the price won't decline?  Right?  They can't make money at $47/bbl. but at a lower price, depressed by greater supply, it's a sure bet?

phaedrus1952's picture

Shale gas and shale oil are two completely distinct entities, although the associated gas produced along with oil has strong influence on overall production and pricing.

$47 WTI is insufficient for long term, viable unconventional production, as well as maintaining the house of Saud and many other governments in power.

The production out of the Appalachian Basin is almost entirely gas, although the liquids - ethane, propane, the butanes and pentanes - are  both significant yet consistently ignored.

The device upon which you are reading this almost certainly was derived a Natural Gas Liquid, and the huge supply is the reason for the current $200 billion dollar build out of US petchem plants, along with Foxconn, LNG and others expanding in the US.

(For comparative purposes, if a professional sport stadium cost $200 million, this is the dollar equivalence of almost 1,000 stadiums in the form of petroleum chemical facilities).

US is now leading exporter of both propane and ethane, along with rise of LNG (methane) exports.

Producers of gas have reduced drastically their drilling, but the wells' productivity is so high that overall output has been stable.

Likewise, production of oil in the Bakken and Eagle Ford is subdued, the Permian, Oklahoman, and even Niobrara production has increased for various reasons.

You may have surmised, this entire hydrocarbon/'shale' topic is vastly more heterogeneous than one might suspect.

Blue Steel 309's picture

Correct. The assets are real and have value. It is the fiat they are traded in that does not.

The entire story is a psyop to convince us the fiat portion of the equation matters.

pparalegal's picture

Government meddled in coal or oil?  I can't remember. Time to reread Atlas Shrugged.

Paul Kersey's picture

So we have to "enroll" in order to find out how to make money through Chris' newsletter. I've learned, the hard way, not to enroll in anything online. The Tylers @ZH should vet these articles, unless, of course, they are making money from these come-ons. However, if they are posting pay-for-play newsletters, they should let us know that they are sponsored.

surfersd's picture

Chris the world is running out of oil Mathewson has been saying this for 10 years. I believe he is even moved off the grid to grow his own food and be self sufficient.

That is all well and good, but being short oil has work d better then the theory that we are running out of it. He seems to forget that OPEC has curtailed production by 2.5 mmbbl if produced would drive the price under 30. Now that would put the shakers out of bsinesss.

CM als says nothing about the fact that demand growth rates are slowing and will head down in OECD countries.

This guy is becoming a bore. He sells subscriptions to hype.

land_of_the_few's picture

Time to reread Edward Gibbon's The History of the Decline And Fall of the Roman Empire.

"Stripped of the diadem and purple, clothed in a vile habit, and loaded with chains, he was transported in a small boat to the Imperial galley of Heraclius, who reproached him with the crimes of his abominable reign. "Wilt thou govern better?" were the last words of the despair of Phocas."

 

shovelhead's picture

It's a wonder they have lasted this long according to a family member in the supply business. They keep losing accounts because they now demand payment on delivery.

Simple as that.

Where and how can they keep finding these suckers with money?

land_of_the_few's picture

Be nice if they would do a good analysis of fracked natgas / LNG too, not just oil.

Conscious Reviver's picture

It's called central planning. Stalin would approve. Banksters can print unlimited free money at zero cost to distort all markets in ways they see as beneficial to them. They can burn FRNs to add global supply and drive the price down. This placates the peons domesticly, reducing the likelihood they revolt against the Bankster regime as their daily struggles are mitigated. Externally, it squeezes there rising rival, Russia who's main export and source of wealth is hydrocarbons.

To the Bankster way of thinking, if you already hit the iceberg you may as well empty the champaign locker before escaping in your lifeboat.

This is an end of empire scenario in play.

And to the guy upthread who says this will all work out as firms bk and debt is destroyed, I presume he means for the new owner, look at the decline rates. You'll still have to move on and start all the infrastructure work all over again in a new spot that won't be as productive as the one you left because sll the easiest, best plays got developed, depleted and abandoned already.

Conscious Reviver's picture

Oh and one more thing.

"It's what enables us to pursue massive goals like ... going to Mars"

Chris M. you go to Mars with that Musk guy. Mind the essentially impossible to live through Van Allen microwave on the way out and back. Bring your lead long johns.

Cutter's picture

Hate these advertisement articles, but his analysis is spot on.

hardmedicine's picture

I certainly DON'T want to subscribe to or give my money to find out what the suggestion is to come out on top of this situation with shale.  Can anyone here give a quick synopsis of how to make money from this scenario.? Looks to me like the best you can do is sell your stocks now and cut your losses.  ;

 

 

Joebloinvestor's picture

If it caused the collapse of OPEC, it was worth it.

falak pema's picture

You don't understand shit awl ; the OPEC is now controlled by the Asian Pivot : By China and Putin's Russia, as biggest consumers and producers of oil with the LOWESt marginal cost/bbl or SCF at their disposal, the ME oil patch; whereas the US is left with a huuuge debt overhang and the HIGHEST marginal cost of fossil on planet earth; aka shale and tar sands! 

ScratInTheHat's picture

Shale oil is a weapon to use against the oil producing countries of the world. It works very well for that.

shovelhead's picture

Nuclear arms race?

Who goes broke first loses?

johnnycanuck's picture

Weaponized ponzi Real Estate scheme?  Yup, ever so the bullshitting America we know.

anomalous's picture

"you’ve been in business for 9 years drilling wells that mostly run out in 3 years,"

So that means that there have been thousands of 3 year old shale wells that have been plugged over the past six years?

No, there hasn't. The wells I know often payout in 3 years or less and will produce for decades.

This fella needs to get a room with Art Berman.

falak pema's picture

the truth about net US imports seems more acute than what this poster says based on this : 

Energy Export Databrowser

More like 6-7 million BPD...

shovelhead's picture

Manuel and Cisco decide that they'll go in the farmers market business so they jump in the pickup, drive out to the watermelon farm and bargain for melons at a $1.00 each and fill up the truck.

On arriving at the farmers market they see a sign Watemelons $ 1.00. So they park at the other end of the market with their own sign, Watermelons $1.00. Cisco suspects that business isn't going that well when the melons are gone and he's counting the money and he arrives at the same $ figure as they started the morning with.

"Hey Manuel, we didn't make any money and it cost us a tank of gas to go back and forth. What now?"

Manuel says "Simple, amigo...We rent a bigger truck."

Welcome to the shale oil business.

Yeah, I know it's a moldy joke but so isn't shale.

junction's picture

As long as crooked politicians rake in payoffs from frackers, the office holders will continue to ignore complaints from people about poisoned water wells, about pipelines laid over their property by eminent domain and about the air they breathe around their homes now toxic.  When these fracking companies go bust, they will leave behind new Superfund pollution sites.